Suresh Chandra, Member

M/s Recorders and Medicare Systems Pvt. Ltd. through its Director and authorized signatory, Shri Jalesh Grover, has filed this complaint under section 21 of the Consumer Protection Act, 1986 against the State Bank of Patiala, Registered and Corporate Office, the Mall, Patiala and its commercial Branch at SCO 103-107, Sector 8-C, Chandigarh claiming deficiency on the part of the respondent/opposite party on account of its failure to renew the insurance policy which it had been doing in its capacity as Monitoring Institution of the complainant Company and for which it had charged fees as consideration for its services.

2. The complainant has made following prayers in its complaint:-

'(a) Declare that the respondent Bank was guilty of deficiency in service upon its failure to renew the Standard Fire and Special Perils Policy with respect to hypothecated and mortgaged Stock, Plant and Machinery and Furniture and Fixtures of the Complainant; and

(b) Direct the Respondent Bank/Opposite party to pay to the Complainant:-

'(i) A sum of Rs.16.14 Crore (Rupees Sixteen Crore Fourteen Lac only) being the amount of losses suffered on account of fire with interest thereupon; and

(ii) A sum of Rs.10.00 Crore (Rupees Ten Crore only) towards damages caused on account of delay in rehabilitation of the Complainant Company’s loss and harassment and mental agony; and

(c) Award the costs towards the present proceedings in favour of the Complainant; and/or

(d) Pass such order or further order(s) as this Hon’ble Commission may deem fit and proper in the facts and circumstances.'

3. The facts leading to filing of this complaint may be narrated thus:-

4. The complainant is a private limited company engaged in the business of manufacture and trading of medical equipment. The complainant company which started its operation in the year 1975 was a profit making company till 2009 when it suffered huge losses on account of disputes with regard to one of its larger contracts with the TCIL, a Govt. of India Undertaking, as a result of which, its Bankers referred a proposal for restructuring of complainant’s debts to the Corporate Restructuring Cell (CDR) under the CDR mechanism. In March 2010, the CDR proposal for the complainant Co. was approved and sanctioned by the CDR Cell and the respondent Bank was appointed as the Monitoring Institution (MI), being the lead bank of the complainant to oversee the implementation of the package and ever since then, the respondent Bank has been performing the said function. It is also averred that the respondent Bank had charged a fee of Rs.12 lakhs from the complainant Co. for its services as Monitoring Institution (MI). It is submitted in the complaint that the respondent Bank was overseeing all the affairs of the complainant in furtherance of the CDR Scheme and to safeguard its own and the interest of other lenders. In this regard, the respondent Bank took over the responsibility of getting the insurance of the assets of the complainant, mortgaged and hypothecated to the Bank, in its own name by making the payment of premium directly to the Insurance Company w.e.f. March, 2011. For this purpose, the respondent Bank was directly dealing with the Insurance Company in this regard and the original policies were handed over to it. In April 2012, the respondent Bank sought renewal of the insurance policy from the Insurance Co. by taking up the proposal form, paying the premium and obtaining the insurance policy which had been issued in its name.

5. In the meanwhile, the complainant Company had become a Sick Undertaking and a reference was made to BIFR under section 15 (1) of the SICA and the complainant was registered as a Sick Undertaking by the BIFR on 1.9.2011. Subsequently, vide BIFR’s order dated 31.12.2012, the complainant Company was declared sick under section 3(1)(o) of SICA and the respondent Bank was appointed as its Operating Agency (OA) under section 17(3) of SICA to prepare a Rehabilitation Scheme for it.

6. A huge fire broke out in the early hours on 13.6.2013 in the factory of the complainant Company which could be controlled and extinguished with the help of fire brigades after 11 hours of continuous fighting with the fire. Intimation was sent regarding the incident by the Company to the respondent Bank, lead Bank and SBI, member bank, regarding the fateful incident of fire vide its letter dated 13.6.2013 with a request to the respondent Bank to intimate the Insurance Co. and get the surveyor appointed to assess the loss. Since no surveyor had approached the Company, the complainant Company again wrote a letter on 14.6.2013 to the respondent Bank to do the needful in the matter followed by another reminder on 15.6.2013. It is submitted by the complainant that it did not take up the matter directly with the Insurance Co. because the insurance policy in question, i.e., for stocks, plant and machinery, furniture and fixtures, equipment etc. had been taken and renewed by the respondent Bank for the last two years as a matter of practice being followed by the respondent Bank consistently and it had not forwarded any copy of insurance policy to the complainant and as such particulars of insurance were not available with the complainant Company. The respondent Bank vide its letter dated 17.6.2013, i.e., after four days after the incident of fire, sent a reply to the letters of the complainant Company informing that the insurance policy of stock/plant and machinery/furniture and fixtures had expired on 16.4.2013 and had not been renewed by the respondent. The respondent Bank also tried to shift the blame for non-renewal of the insurance policy on the complainant Company. Be that as it may, the complainant Company then came to know about the fact of non-renewal of the insurance policy.

7. On coming to know of the fact that the respondent Bank had failed to get the insurance policy renewed which the respondent had undertaken to do and so obliged to do, the complainant vide its letter dated 22.6.2013 called upon the respondent Bank to appoint a surveyor to assess the losses caused on account of fire and compensate the complainant Company for the losses caused on account of respondent’s failure to renew the insurance policy which had expired on 16.4.2013. This request was followed by another letter dated 28.9.2013 to the respondent Bank requesting them to compensate the Company for the fire loss as they are liable for the same due to non-renewal of the insurance policy by them. The respondent Bank vide its letter dated 19.10.2013 informed the complainant that the Bank is not liable to pay/compensate any fire loss amount. It also referred to its earlier letter dated 17.6.2013 in this regard.

8. Since the respondent did not take any steps to engage an independent surveyor to assess the fire loss in spite of its requests, the complainant Company appointed an independent surveyor who after carrying out the assessment assessed the fire loss at Rs.16.14 crores. A copy of the report of the surveyor was duly communicated to the respondent Bank and they were again called upon to compensate the complainant for the losses caused. According to the complainant, the respondent Bank has not only failed in its responsibility of keeping all the current/fixed assets of the complainant fully insured, which it had been doing so, it is also guilty of gross negligence in not intimating the complainant well in time of not renewing the policy. It is alleged that had the respondent acted diligently and performed its duty and had not been negligent, the complainant could have got the insurance renewed and recovered the loss from the Insurance Co. This gross negligence and lapse on the part of the respondent has resulted in huge losses which the respondent Bank is liable to compensate to the complainant. It is mentioned in the complaint that apart from this loss, the rehabilitation of the complainant Company has also been delayed and it has suffered further losses on account of delay in execution of pending orders, cancellation of orders, payment of interest on dues of vendors, loss of business opportunities, etc. It is also mentioned that on the failure of the respondent Bank to pay the compensation for the losses caused to it, the complainant as per the direction of the BIFR, vide its order dated 28.1.2014, moved an application before the BIFR for direction to the respondent Bank to compensate the complainant for huge losses caused to it due to negligence of the Bank. An application of the complainant Company in this regard was pending for consideration as on the date of filing of this consumer complaint.

9. In the circumstances, treating the action of the respondent Bank in not renewing the insurance policy in its capacity as Monitoring Institution of the complainant for which it had charged huge fees of Rs.12 lakhs from the complainant, as deficiency in service and unfair trade practice, the complainant Company has filed the present consumer complaint. It is submitted that the cause of action first arose on 17.4.2013 when the respondent Bank failed to get the insurance policy renewed and then arose on 13.6.2013 when the fire broke out resulting in huge losses. It again arose on 17.6.2013 when the respondent Bank denied its liability to insure the goods and later it arose on 19.10.2013 when the respondent Bank finally denied its liability and refused to pay/compensate for the loss suffered by the complainant Company. Thus, it is averred that the complaint is filed within the period of limitation and the cause of action is continuing one.

10. We have heard Shri Pradeep Bakshi and Ms. Sanya Talwar, Advocates for the complainants and perused the record.

11. It is clear from the bare reading of the complaint that the services of the respondent Bank were being used for business purposes. It is also seen that fees of Rs.12 lakhs which the respondent Bank had charged from the complainant for its services as Monitoring Institution was purely for commercial/business purposes. In view of this, the complainant Company cannot be covered by the definition of a consumer by virtue of the provisions of section 2 (1) (d) which reads thus:-

'(d) "consumer" means any person who-

(i) buys any goods for a consideration which has been paid or promised or partly paid and partly promised, or under any system of deferred payment and includes any user of such goods other than the person who buys such goods for consideration paid or promised or partly paid or partly promised, or under any system of deferred payment when such use is made with the approval of such person, but does not include a person who obtains such goods for resale or for any commercial purpose; or

(ii) [hires or avails of] any services for a consideration which has been paid or promised or partly paid and partly promised, or under any system of deferred payment and includes any beneficiary of such services other than the person who 'hires or avails of the services for consideration paid or promised, or partly paid and partly promised, or under any system of deferred payment, when such services are availed of with the approval of the first mentioned person [but does not include a person who avails of such services for any commercial purposes];

[Explanation.- For the purposes of this clause, 'commercial purpose' does not include use by a person of goods bought and used by

him and services availed by him exclusively for the purposes of earning his livelihood by means of self-employment;]'12. Since the services of the respondent Bank have been availed of by the complainant for business/commercial purposes, its complaint is not maintainable before the consumer Fora under the Consumer Protection Act, 1986 in view of the provisions of section 2 (1) (d) reproduced above. Although the explanation appended to section 2 (1) (d) of the Act provides that the 'commercial purpose' does not include the services availed by the person exclusively for the purpose of earning his livelihood by means of self-employment. However, the above noted explanation restricting the scope of the commercial purpose is of no avail to the complainant because complainant is a body corporate and not a natural person who needs to indulge to earn his livelihood. In view of this, we are of considered view that the complainant is not covered under the definition of consumer as defined under section 2 (1) (d) (ii) of the Act and as such the complaint is not maintainable before the consumer Fora. The complaint is, therefore, dismissed as not maintainable. It will, however, be open to the complainant to seek remedy before the appropriate Forum in accordance with the provisions of law.